Life Time Group Holdings, Inc. (LTH) Earnings Call Transcript & Summary

Let's get started. Hi, I'm Robbie Ohmes from BofA Global Research. Alex Perry and I are just really pleased to have Life Time Holdings here with us today. We've got Bahram Akradi, Founder and CEO; and Bob Houghton, CFO. Look, Life Time has been on this amazing transformational journey with a focus on premiutizing and enhancing the appeal of its clubs. I think Bahram's used the term luxury, athletic country club, a lot of different great terms to talk about all these things that he's been doing, especially over the last 3 to 5 years. And all these things are supporting membership experience and dues and things like that.

So let me turn it over to -- well, actually, let me launch right in with a question for Bahram. So I think my question would be -- and thanks for joining us today. But the business has evolved a lot the last 3 years. It's kind of -- you've done a lot of transformations. I think there's a lot of confusions about how Life Time is maybe different now versus 2019. So maybe you could just talk through some of the biggest changes that you've made since 2019.

Yes. Thank you. It's been at least a dozen or more transformative change. We basically were very successful. Revenue and EBITDA, after taking the impact of rents, sale-leasebacks out of it, basically have grown every year since the inception of the company until 2020 when we were shutdown. So the track record was solid. Things were working well enough that all the adjustments you would make would be moderate adjustments evolutionary. 2020, when we were shut down and the shutdown was going to take more than 3 weeks, I knew immediately that to come back and surpass the past, we would have to fundamentally transform and get ourselves updated for the future. A portion of the membership, even in high-use clubs, this space, if you try to compare our athletic country clubs to the low-price gyms, it shouldn't be a comparison. But if you do, that business is a nonuse model. There's nothing wrong with it. It's just a customer's desire not to use the club, 70%, 80% of the customer. Ours is the reverse of that. About 80% of our customers are using the club, at least in the last 30 days, but 19% -- 20% weren't. So when this was going to take longer than that, I knew that we're going to get those customers who regularly come back, use the club sooner or later, but the ones who weren't using the club, weren't going to come back. So we started making the design change adaptation immediately at that point. The plan was, and I said this to our private equity investors, at 88% membership count, we're going to surpass the dues of the past, and we achieved that. At 88%, we were 100% and 203% of the dues. We also focused on creating a bigger moat, bigger separation within Life Time as an experiential company rather than a commodity company. So we stepped on the gas on everything to improve customer experience. We eliminated all the sales system. No health club jockey trying to pressure you to sales. You go online, you look at the information. If you like it, somebody will assist you to buy. We're selling more dollars every single month since we've started this. More dollars per club than we ever sold before with no salespeople. Now we took that $50 million. We spent $40 million of it and added classes, alpha, which is like a CrossFit or GTS, which is like Orangetheory or Ultra Fit, which is my creation rather than like a Barry's Bootcamp, right? All of these things made it so much easier for the customer to basically buy one membership, use their app, come in. We also transformed our information technology. We know 100x more about the customer. I know which yoga mat you would have taken a class on. I know exactly what you're going to do when you come to club before you come in. So you want to play pickleball, you want to play tennis, you want to do yoga, you want to get the spa, you can order food on the -- for the cafe in the locker room and pick it up. I mean we have so much more information. And so the experience was better, but take a club like Syosset, Long Island, New York. It was priced wrong by me, my fault, when we opened it up. We should have charged $200-plus when we started. We charged $139. The clubs were too crowded in some -- successful clubs were too crowded. And when we gained a new member, who basically stretched themselves to join, we lost a customer who was the most affluent, who was frustrated with too many people. So we had one-time the opportunity to reset and correct. It was during this tsunami hurricane, take advantage of all of that pain and actually come back with a model that is far superior. Today, I can assure everyone, we will deliver higher revenue, better margin, better EBITDA than we ever have had. We are on a record -- never said it publicly -- we are on a record-setting year. Everything is going exactly as we hoped. And I can't be more proud of the Life Time team, every single one of those 30-plus thousand people, who have passionately stayed focused. And finally, I would say this. A company is no different than any species who lives on earth. You adapt or you die. And we -- for 30 years, we have adapted our company always with one light, member point of view. Our pricing strategy is the following of the member requests, "Hey, I want to have -- we want you to raise the price, so the experience remains exquisite." The other way we changed the prices without the salespeople now, we have no inhibitors. We used to try to take the price up $10 from $69 to $79. And our salespeople couldn't sell the membership for 3 weeks. Now the GM calls us, "I want to move the price up from $199 to $219. Okay, next week, we can get it on the schedule by Tuesday or Wednesday." We changed the price. 90% of our customers who go online, 75% of our membership are buying online, 25% common, some member concierge, the corporate, it has system. They got -- 90% go online. It's the first time they go online, they buy. They're not coming in the second, third time. They haven't seen the price change. They come in. We -- the investors are making this way more complicated than this. This is actually not a difficult decision, easy to change the price. The customer will vote yes or no. If they're not buying at a rate that is acceptable to our membership growth, we could take it down. We haven't taken one down yet. But it's as easy as taking it up, you can bring it back down. So things are working. The model is the most efficient. The other thing that was the negative to success of the past is that I was busy working with David, Simon and Sandeep and couple of us to work on their malls to transform the malls and we become as the anchor, so we would get the better rent. And so the other executives are running the company, while things were going well. When things were in a hurricane, I come back, I see we have 7 layers for somebody to get an answer to add a treadmill to a club. So I took 4 layers out of every decision. So people say it's cost cutting, it's not cost cutting at all. We are not -- I told the GMs if I come to your clubs and your club is not pristine, locker rooms are not exquisite, you lose your qualification for any bonus. Spend more money on programming, teach more path classes, have better infrastructure. There is no cost cutting. It was rewiring of the company to make it significantly more efficient. Our corporate office in 2019 was $198 million on $1.9 billion of EBITDA -- revenue. We added $12 million of public company expense that would be $210 million. On our guidance on revenue, that would mean this year, corporate office would be $230 million, $240 million. It's going to be about $160 million. And this is -- you go -- any one of you, here or listening, go to the clubs and ask the GMs, ask them, what do they like better? They love their world today. They can get the answer. They are decision makers, they can decide on the faith of their ship that they're running. It's just much more efficient business model. We haven't gone through cost cutting. So just those are the type of things I want to tell you.

Great. And then just to go off that, I wanted to ask about some of the key initiatives that you've rolled out over the past year with pickleball, small-format group training that alongside the decoding of the clubs. What do you think has been the key initiatives that's reducing churn versus pre-pandemic? And then maybe give the audience more color on sort of what the historical churn rate has looked like and what it looks like now?

That's a great fundamental question. So again, our business model is a use model. If you're using a nonuse model, you want to do to low price and advertising, get the people to sign up and hope they don't use it. There's nothing wrong with that model, it's brilliant for that model. For us, it's the reverse. We want the customer to use the club. So every initiative we take is to make your experience better and easier for you to engage. So our small group training was a disaster, to be honest with you guys, pre-COVID. You would have to join the club, pay the dues of the club, then if you wanted to do one of the small-group classes, you would have to buy $170, $180 a month, separate purchase for that. You would be isolated to those particular classes at those times. So we changed that and made it part of what we call the signature membership. You -- instead of $129 or $149, $139 club, you pay $179 to $199 and pickleball, tennis courts, the small group is all included and you use your app to book. The customer loves it, and they vote on their own to buy that membership. Some of the clubs where they open at $229, $259, $299, $279, those are already signature clubs. They basically include that, it's easy enough. So we've made it easier and more convenient to the customer. To answer your question finally, because we don't advertise, we spent between $800,000, $900,000 a month to maximum of $1.4 million, $1.5 million in a month, $15 million in a year on buying advertising. We're not like companies spending $300 million in marketing. All of the money goes into the fundamental of the product, right? And what -- the system that we basically came in was what we called SSR, 1.5 years, 2 years ago as part of the main strategy. Swipes, subscription, revenue. Anything I can do to make you have a need or want to come to the club and use the club, increase it so every time you visit, it is 1 swipe. And every 10 swipes on average is one membership. So all you have to do is do the type of things that makes the customer want to come to use your place. And so we focused on that strategy and by January of this year -- by December 27, you went to the club, you could just kind of the moment in time you went to that right after Christmas and you're like, all right, we are back to normal and beyond. Clubs are busy. They're vibrant. People are using the club in some ways as busy as I have ever seen it and -- except they're paying much higher dues and they're getting more for what they pay.

I wanted to ask 1 quick follow-up on that. Can you just clarify, when you say 10 swipes per membership, are you just saying that once a member hits 10 swipes that they at least -- they're less likely to churn or...

No. If you take a look at our club standard, you take a club that has 60,000 swipes in a month. You're going to go back. It's going to be very close to 6,000 memberships. So if a club is modeled for us to be at 7,000 memberships and that GM asked me what do I do? What are their programs or their classes, what are their great performer you can add on to increase your traffic? You need to go from 60,000 swipes to 70,000 swipes, and you're going to get to 7,000 memberships, that's the math. Now some clubs are 9.9, some clubs are 9.5, some brand new clubs at 12 or 13. But that's anomaly because when people join the new clubs, they're using the club at the higher utilization rate. After the club settles down, it all kind of averages out to about 10.

Perfect. That's great.

And maybe since we're talking about pricing and maybe, Bob, this might be for you to help with. Can you -- what's in the model in terms of pricing in your guidance for this year? And also enrollment fees came up when you guys reported the quarter. You weren't doing enrollment fees during COVID. There's a lot of confusion out there about enrollment fees. How important is that to pricing?

Let him take the first one, and I'll take the second one.

Yes. So in terms of pricing, we've got -- we've been -- we talked about on the call that average pricing is about $162, that's steadily increasing. That should come up a little bit from here. But it's really, as Bahram talked about, it's really a measured approach to pricing. It's in response to what we're hearing from our members, "Hey, we want to have an optimal member experience." So in some cases, our members come to us to ask for us to take the prices higher, so they get that Four Seasons experience. So we very much -- it's very much a member-driven pricing action that we take.

So let's talk about the normal course and the difference, if there is any. So every year, when it comes to about April, we have a large number of families -- affluent families who join Life Time because of our incredible beach clubs. And they want to use the beach club. And if there isn't a penalty, they join and they drop out in September. So we're going to make it their choice. If they want to join and drop out, they're going to pay $700, $800 in pool pass in the affluent markets. In some markets, that's only $100 or $200 for the pool pass. The pool pass for everybody's knowledge is more of a dues averaged out for those 3, 4 months, and it's basically booked as dues spread out over those 3, 4 months of the pool. The initiation fee, which we have now in maybe a dozen clubs, like Frisco or West Palm Beach, all these clubs, we've opened with a couple of hundred dollars of initiation fee and we have never taken them back down. We have lower attrition. The $200, $300 over 33 months or 36 months length of membership basically is miniscule. It's like a 1% of revenue. It has no real value. What it does do is the customer who pays initiation fee absolutely has a lower attrition rate. The only reason we want that is to reduce this kind of in-and-out behavior. So by the fact that we have no friction for joining, and we used to have friction for canceling. We had to make you come in pre-COVID to the club physically to try to cancel, to try to have the swipe, the salespeople try to get you one more time not to do it. Hate that. It's not the customer service mindset. So right now, you can join when you want. Nobody pressures you. Nobody calls you or harasses you. When you want to drop out, you can sign out, you can drop off in online. So it's a much more customer-friendly approach. The negative is that just as easy to drop out. So in order for you to maintain the attrition rates we have maintained, we just have to deliver better program, which I love. So that's what we are doing, but ultimately, it isn't a new thing. I have planned that at some point, just like any country club, we will have enrollment fee. When do you add enrollment fee? Club gets to that saturation point. I've been giving this example to the others. The past model, we have so many clubs that were saturated in memberships, right? That basically, every time we gain a member, we lost one. We couldn't go anywhere. Now the clubs aren't saturated with that many memberships. So we can gain more affluent customer base with customers for coming in. And so we have way more headroom now than we ever had before, based on the way we're doing this. But the enrollment fee is going to come in when a club has reached the point where I don't want more members. We have taken the dues already up to like $259 or $269, $299. We don't want to take the dues up anymore for new customer. So now this opportunity tells you, okay, add enrollment fee there. It's a no-brainer. This is not like decisions where it's going to sink you or [ Sphere Rocket ]. It's just a rapid correction of mistakes, very, very adaptive. When we decide to build one of these boxes that you see in front of those, that's solving the exact equation. It's like you're going to send the child to the moon. It's going to cost $60 million, $70 million, $100 million, you don't want to miss. We never have. We do every kind of the study under the sun, demographics, psychographics, traffic barriers, everything you can possibly imagine before we decide to put one of these on the ground. But when you're deciding to change the price of $10 or bring it down $5 or add $100 initiation fee or take it off, I mean it's just ridiculous that the investor is actually making a case about this. It's just a normal course of adjustments to find the optimization that could serve the company best.

And so just to be clear, these initiation fees will not be a barrier to membership acquisition and they help with membership attrition.

Every year, every summer, including even 2021 or 2022, we have had those pool pass initiation fees in. It's not new. The question is, as we roll them in, do we take them back to zero or the club is full enough that we decided to keep it at $100 or $200. I don't know. We'll figure that out as it becomes.

Sorry, just to clarify that. So when were the original sort of pool pass initiation fees sort of extra fees implemented? Was that...

They have been -- we were doing it pre-COVID, then we sort of -- we were basically practically shutdown, didn't have a season in 2020. 2021, we had it; '22, we had it; and '23, we'll have it. It's not new. It's the same thing. It's just we deliberately go club by club, decide what club based on the particular situation, how much of that pool pass. Clubs in the East Coast, where not only pool clubs, just the pool, they're charging $3,000 for a summer, right? We easily can and we need to, it's not about money, it's about the fact that we have customers who's been paying dues for 3 years, right? It's not fair for them to be crowded by somebody who just joins for the 3 or 4 months. So it's basically designed. Everything -- I emphasize again. Everything we do is designed to first managed experience. The numbers will almost follow.

But the new join enrollment fee is new, right, in terms of, you're piloting that in a certain amount of clubs.

It's basically the -- we are -- most new clubs that we're opening, they open with that enrollment fee. If we felt like the membership isn't ramping fast enough, we take it out. But right now, we have no issue with the memberships ramping and the dues ramping as good as we want. We just opened the Irvine Club in California, a big beautiful club on 401 -- 405. It opens before the month is over, it's already past its goal for dues for the end of the month opening. But now we still have 15 more days of ramping up membership and growing that dues. So things are -- and it has a $200 initiation fee. So it's really just a function of -- and again, it's -- I emphasize investors should not make -- that's not what you need to worry about. It's just a minor daily adjustments we make to optimize the experience and the flow.

And then just on -- moving on to the next question. Just can you remind us in terms of how significant 1Q joins are to the year? How important that sort of January, February season is for you guys? And then maybe just remind us sort of what was contemplated and sort of the guidance in the quarter?

So the one thing about guidance I want to clear -- make it clear is we upped the guidance by $10 million bottom and top. And inadvertently, some investors assume that $10 million was on the same schedule we also anticipated because of the timing of the $300 million of sale leaseback that the rent may be $10 million less. They equated that that's the same $10 million. I want to be clear to everyone, we've been -- that it's not the same $10 million. The $10 million bump on the guidance was completely independent of rent. So -- and I can't tell you guys that rent will be -- we gave you a range on the rent range there. And so those are independent, number one. Okay. The other question was?

Just in terms of the importance of 1Q memberships for the year and just overall, what was contemplated?

Yes. So January generally is the strongest membership gain for our business, followed by May and June because of the pools, the beach clubs. So the 2020, it was basic -- 2022 was basically dead because of the Delta, Omicron. We gained like 3,000 versus like 12,000, 11,000. We haven't publicly gave numbers for the first Q right now on membership. So I'll just give you guys. It is well beyond our expectations. It's been the strongest season I have seen in decades.

Impressive. I'm going to shift over to in-center revenues and sort of try and understand how that might be changing as you keep premiutizing the experience because maybe there are going to be less members per club historically. So I think it used to -- historically, it's like 1/3 of revenues. Is that going to get back to that level? Or how are you thinking about in-center revenues?

Part of that number is skewed because the dues revenue is getting so strong, right? And it would lead the in-center. The biggest factor in the in-center for us was personal training. I was always suspicious of personal training because I would never see a value in getting a trainer for myself. There's nothing they're going to tell me I don't know. So I don't need them to tell or write me a program, tell me, count my reps for me. So we changed and you've seen in our program, we created what we call branded DPT, dynamically engaged personal training. It's an entirely different experience than what you have gone through in the past. Now some trainers anywhere us, other places across the country, were automatically doing this, just not intentionally, which is basically when you come in, the right session takes you through stretch table and do a power stretch, which is like your chiropractor or physical therapist will do to you, you can do it yourself. It's followed by a training program that is completely interactive, like a tennis coach throwing you a medicine ball and you catching it back or hitting the ball. If I am giving you DPT, which again, is my creation, I've taken people through it, is on fire right now. In 10 minutes into your workout, I'm sweating. If I am not engaged like that, it's not worth $100 to $150. I mean your massage therapist, your chiropractor, your physical therapist is working their butt off for that same dollar. So this personal training, where the guy writes a program, and AI easily can write in this -- any AI today. You tell them your weight, your age, your this, your that, telling your goal, can write your program. It's not -- that has no value. Coaching and being interactive trainer is like a massage therapist. That's not going to be replaced by digital, AI or online. So we reinvented DPT, we reinvented the structure. And in January, February, our EBITDA margin from that surpassed any of the past years. The revenue not yet, but by end of the year, we will produce not only more revenue from PT, which is the second largest EBITDA generator in our company. So you will see, as you come up, we're going to catch up on in-center, largely because spas doing fine, but it's not a game changer. It basically is an added amenity of like a Four-Season or Ritz-Carlton, that's what's the separation of lifestyle. The cafe, again, is a service. So those are doing well, but they're not a big number. PT, aquatics are 2 big margin generators, and they're both roaring back.

Maybe switching gears again. Maybe talk to us about the evolution of the competitive environment, and who you actually view as your top competitors. Is it country clubs where maybe you're benefiting from some trade down? Is it boutique fitness, other high-end fitness providers like an Equinox for instance?

It's a good question, and I can walk you through this a couple of different ways. Life Time now has been in existence where first club, real club prototype opened in September of 1994. It's coming up to about 29 years with this prototype model. Everybody has watched it, everybody has tried to copy it, nobody has been able to. There's 10,000 details. You have to run it meticulously and you got to constantly adapt. It takes a lot of work. But if I left today, and I took the top 50 people from our company with me, there's no way I could put a dent into Life Time, not a chance. These clubs take 4, 5, 6, 7 years of gestation time from finding, planning, negotiating, securing, getting approvals, building, and they cost $50 million, $60 million, $70 million to build them. And it takes 3, 4, 5 years to get any returns. So by design, as an engineer, I designed a business model not really strong, but also had a big moat. But today, if I left in the next 5 years, maybe I could take 5 or 10 locations. Life Time already has 163, 164 clubs and another 80 or so in the pipeline. I mean unless we are inept, fall asleep, quit working and quit adapting, I can't see anybody who's going to catch up.

Impressive. So I'm going to ask this question because of some of the other companies I cover, I don't recall you guys talking a lot about this, but other companies I cover are really struggling with labor inflation and they're seeing shortages in a lot of places. Are you guys feeling that at all? Or is it just...

Extremely miniscule. There has been so many massage schools that have closed. There is shortage of really solid grade, high-end massage therapists. That's a legit. We could take -- we could double the number of massage therapists if they were there. It's such a miniscule part of our business, that's a rounding error. I personally don't like it because I like to get a chance to get in. I have to book with my 2 favorite massage therapists months in advance to get in. So that's a good and bad problem. The other side is that Life Time brand -- look, we have no problem getting people, kids, 18, 17, 20, they'll work for $15 an hour at Life Time before they would work for $25 an hour at McDonald's. So really, there is the brand and the way we -- the culture of care that we have, when we opened Chestnut Hill in Boston, unemployment was 1.9 -- this was pre-COVID, 1.9% in that market. 174 job openings, we had 1,700 applicants. So I feel for the other companies who have to deal with that. But I can assure you, we have no excuse. We have no problem with it whatsoever. We're in a great situation with our brand and the fact that people want to work in these athletic country clubs.

Wanted to ask a little bit about pickleball. I think it's been a pretty exciting initiative for you guys. Maybe just remind us how many clubs now have pickleball? How those clubs are performing versus some that don't? And then what's that helping in terms of customer acquisition?

It's a great question. So I was playing tennis and watching some people playing pickleball. And one of the courts, they had tapes over my tennis court, like what the hell are these lines on the tennis court, I was pissed. They were beating me out to give them some pickleball courts. And I said, okay, to get rid of those tapes on my tennis court, I'll take one tennis court and we convert it to pickleball. And I did that in 2 clubs. We got 4 pickleball courts in 2 clubs and sort of 1 tennis court. One Sunday, I was invited to go play and I'm like, okay, what the hell, I go play. I played and I figured it out. I'm like this sport is like nothing I've ever seen in my 40 years doing this thing. Immediately, I realized -- at first, I thought it was just for old people who can't do anything else, they do pickleball. But in fact, the range is you can have a 10-year-old play, you can have a 25-year-old athletic ninja play. And the range is expanse, it's fun. It unifies America the way I've seen nothing do. Every people from every part of the world, they're playing this, young and old, men and women, it's amazing. And again, if I try to teach somebody tennis, I couldn't play tennis with them for a year. It takes forever to try to teach people before they can move to hit back and have fun. You can put some pebble in somebody's hand, coach them for 5, 10 minutes and hit with them. It is phenomenal. So I looked at it and I said, this will be the fastest growing sport. Not only that, it will be the most participated sport in America by 2030. So that was my takeaway from it. Then I looked at our opportunity. We had 220-230 basketball courts. And we had all these -- we're the largest provider of tennis by magnitude of 3. So we took 10%, 15% of our tennis courts, 1/3 of our basketball courts and we put out 500 courts today. By a landslide, Life Time is the largest provider of pickleball. Now let's talk about what it would take. To build 8 courts -- to build 10 courts, look at any business model, $15 million to $18 million facilities to have 10 indoor courts. It would take at least $0.5 billion from scratch to be deployed to build -- 10 years, to build 500 courts. We could do it in 1 year and use like $25 million to kind of re-purpose those courts, so we took it. Participation has gone from 16,000 to over 100,000 unique participants. It is flying. We're going to do 700 -- we're going to finish the year by about 700 courts or more this year. And then by end of next year, we will have at least 1,000. We're going to deliver the best experience. We're the only company that you join, you can use your app, you're moving to -- you're traveling for a weekend to Arizona, you can go to a Life Time Club and play pickleball. You go to Miami. You go to -- you can go to Boca. You go to West Palm Beach. You can travel around the country. In Manhattan, we're getting -- we've got 2, we've got 8 more coming in the city. We're going to provide the best option for that -- for people to get to pickleball. The negative to it is that just like everything else, when racquetball got hot, doesn't have the same range. It wouldn't have the same growth, but still there is a moment in time where the supply is way shorter than demand and everybody can do them and everybody can succeed. Sometime, way in the future, 5, 6, 7 years from now, there could be a time where the supply is more than the demand. But then the ones who are just building a pickleball-only facilities and they don't have everything else that supports it, are going to have a hard time. But for right now, it is the most -- I mean if you think about -- thinking about all angles, good and bad, that would be something you need to be -- have a foresight. But we have a company, we're not spending $1.5 million a quarter to build it, right? That's our advantage.

So pickleball isn't all just old people, I guess?

It's -- and I anticipate...

It was really a leading question to ARORA and talking about what you're doing there as well. And where does that rank versus pickleball?

It's been a phenomenal program. We basically were doing stuff for the Medicare, Medicaid, SilverSneakers programming. But it was sort of a hodgepodge, unbranded, not understood programming. It was just kind of a -- so we created ARORA. We branded and systematized the programming, the communication, and that has been on fire. So it's largely paid for basic access to the club. We get the same fee from the insurance companies, whether it's the people use it 1 time in a month or 10 times in a month. And then if they want to get expanded programming, they can upgrade to a signature and get that. So it's been a huge success. And we basically program it, so they're using the club during the times when the club has more capacity.

Should we see if anyone in the audience has any questions? Just on -- I wanted to go back to the ARORA. So you've announced some interesting partnerships. I think you had one with UnitedHealthcare. Can you just maybe talk about some of the partnerships that you have around that's attracting maybe an older demographic into the club?

Yes. I mean, look, we have some of the biggest providers who are now wanting to come in and we are basically looking to see how much of that we want to allow. Again, remember the point I made about saturation of the club in the system. But the program was clunky, like it was not easy, and it wasn't understood, it was difficult. So we simplified it. We made it one price across the country. Many of our clubs were not including that program, now they all are. So again, it became much more easy to digest, and it's like a 200%, 300% growth year-on-year on that program. So it's going really, really well.

We're going to go visit the Coral Gables Club tonight. There may be some slots available. I'm not sure if some of you haven't signed up. But what can you tell us about that club in life and work and how we should think about that? And does this -- the future club is going to look more like this club? Or are there other clubs that are more likely to -- or stand-alone clubs more likely.

I think you're going to get a blend of all kinds of clubs as you go forward rather than just suburban style clubs. You're going to get a blend of them. The -- you'll see that club is -- doesn't have basketball, doesn't have an indoor pool. It has an amazing spa, amazing cafe, incredible beach club and super -- sort of a beautiful elegant style. The developer was building 495 apartment units. Once they saw the impact of the Life Time name, Life Time -- on Life Time Work or Life Time Living, they came in. The principal, [indiscernible], first flew in for 2 hours, shook hands, made a deal to name it Life Time Living and let us run it as a Life Time Living. We ramped that for him at the record level. We got higher rent per square foot than anything in the market, and he sold it to Hines for the second highest price per door that has been done in here. Life Time Living concept is designed to create -- to make us like the anchors of the past to the big malls. We power that deal. If you go to Chicago to one Chicago, we make that apartment rent faster, right? Get a higher rent per square foot and have lower attrition. Those are the major 3 KPIs of any apartment business. So as a result, that model, it allows us to be in negotiations on dozens of deals right now, but may be built in 4 years or 5 years high rises where the apartment is basically benefiting from the club and the club gets a substantially reduced rent per square foot that whether we take to build it naturally. In that location, the landlord is a little bit into the program. He came, I am going to take 1 floor of the apartments out. Why didn't you do Life Time Work. And when we did Life Time Work, Life Time Living and Life Time Club, it was literally magic, because now people would come in to look at Life Time Work, say, you know what, I want to get an apartment here as well. And then people told me anecdotally like, you know what, we just sold our car. We don't need to have a car. It's naturally and intuitively, the Life Time Living Village -- Life Time Village, which is live, work, play together is naturally and intuitively environmentally friendly. It reduces 60% of otherwise you driving either your electric pollution car or your gas pollution car, it just eliminates that drive.

We have run out of time, unless there's any last questions from the audience? If not, I want to thank Bahram and Bob for a great presentation. This is -- really looking forward to their visit tomorrow.

Thank you so much.

Thank you.

Thank you.